A clearing account is usually a temporary account containing costs or amounts that are to be transferred to another account. An example is the income summary account containing
revenue
In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business.
Commercial revenue may also be referred to as sales or as turnover. Some compan ...
and
expense
An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition i ...
amounts to be transferred to
retained earnings at the close of a fiscal period.
Other example of clearing account is excise clearing account.
References
Accounting terminology
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